About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds Other Sites:   depositrates.co.nz  |   landlords.co.nz
Last Article Uploaded: Tuesday, September 30th, 8:47PM
rss
Latest Headlines

Managers stopped from using loophole

Finance Minister Michael Cullen says he will close a loop hole in the law which fund managers have been looking at exploiting.

Wednesday, November 7th 2001, 6:34AM
A possible loophole in the law that may allow unit trust managers to take advantage of excess imputation credits to achieve an unintended windfall gain at a potential cost to the revenue of $30 million is to be closed.

"The change will clarify that managers cannot take advantage of section CF2(15) of the Income Tax Act to generate excess imputation credits following a simple redemption of units," revenue minister Michael Cullen says.

Investors in unit trusts usually dispose of their units by selling them back to the unit trust manager at market value. The manager then redeems them at the same time with the unit trust.

This is usually a straightforward operation in which the manager does not make a cash gain or loss.

"The government is aware that some managers are trying to use the excess imputation credits arising from these transactions to offset their other income," Cullen says.

"It was never the intention of the law that imputation credits gained in this manner should be used in such a way."

Cullen says the law will be amended to ensure that when unit trust managers redeem units in the ordinary course of their business they will not be able to use the excess imputation credits arising from any dividend received if it merely reflects the manager's purchase costs of the units.

The change, once enacted, will apply from today with effect from 1 April 1996, when the relevant rules came into force. It will not apply to unit trust managers who advised Inland Revenue before the date of this announcement that they intended to adopt or had adopted the position that this proposed amendment addresses.

The amendment will be included in the tax bill to be introduced to Parliament in December.

Cullen says the bill will also address the 'negative'dividend' issue. The change will allow unit trusts to use lost available subscribed capital that arises when units are redeemed to cover shortfalls in their imputation credit accounts.

« Finalists announcedSovereign takes regulation bull by the horns »

Special Offers

Commenting is closed

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
  • AMP: Concern over advice quality
    “Hi Mike Thanks for those comments and it’s good to see you engaging with the industry. In the 2006 to 2009 period I...”
    2 days ago by Brent Sheather
  • AMP: Concern over advice quality
    “Brent - AMP are talking about a CFP. Thus the education would involve a university level level 7 grad diploma, not some off-the-cuff...”
    4 days ago by Mike Naylor
  • Van Eyk offices searched
    “This is an extraordinarily bad look for the financial services industry. Whilst I hope that nothing sinister has occurred,...”
    5 days ago by Pragmatic
  • RFA requirements 'inadequate'
    “Lovelace, thanks for your comments. You couldn't be more wrong....”
    5 days ago by Carey Church
  • RFA requirements 'inadequate'
    “Hi Lovelace - if you what you say is true then you are in breach of the Financial Advisers Disclosure regulations 2010 which...”
    5 days ago by gavin austin adviser business compliance
Subscribe Now

Weekly Wrap

Previous News

MORE NEWS»

Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AMP Home Loans 7.24 5.79 6.39 6.65
AMP Home Loans $200k+ 7.14 5.69 6.29 6.55
AMP Home Loans LVR <80% - - 5.85 6.29
ANZ 6.74 6.15 6.49 6.49
ANZ LVR > 90 6.74 6.65 6.99 6.99
ANZ Special - 5.75 5.99 -
ASB Bank 6.75 6.09 6.40 6.65
ASB Bank Special - - 5.99 6.19
BankDirect 6.75 6.09 6.99 6.65
BankDirect Special - - 5.99 6.19
BNZ - Classic - - 5.99 6.19
Lender Flt 1yr 2yr 3yr
BNZ - GlobalPlus 6.74 5.99 6.39 6.59
BNZ - Mortgage One 7.15 - - -
BNZ - Rapid Repay 6.74 - - -
BNZ - Std, FlyBuys 6.74 5.99 6.39 6.59
BNZ - TotalMoney 6.74 - - -
Credit Union Auckland 6.70 - - -
Credit Union Baywide 6.45 5.90 6.50 -
Credit Union North 6.45 - - -
Credit Union South 5.75 - - -
eMortgage 6.04 6.15 6.69 7.19
Finance Direct 6.10 6.45 6.69 7.10
Lender Flt 1yr 2yr 3yr
First Credit Union 6.45 - - -
General Finance 5.95 6.25 6.50 7.10
HBS Bank 6.15 5.85 5.99 6.19
HBS Special - - - 5.89
Heartland 6.70 7.00 7.25 7.85
Heretaunga Building Society 6.70 6.00 6.50 -
Housing NZ Corp 6.74 5.99 6.39 6.59
HSBC Premier 6.84 5.95 5.95 6.39
HSBC Premier LVR > 80% - 5.75 5.75 5.75
HSBC Special - - - -
ICBC 6.75 5.99 6.39 -
Lender Flt 1yr 2yr 3yr
Kiwibank 6.65 5.79 6.39 6.65
Kiwibank - Capped 5.65 6.50 - -
Kiwibank - Offset 6.55 - - -
Kiwibank LVR > 80% - - 5.89 6.19
Liberty - - - -
Napier Building Society 5.80 6.00 6.70 -
Nelson Building Society 6.95 6.15 6.60 -
NZ Home Loans 6.85 6.09 6.40 6.65
Perpetual Trust 7.70 - - -
Resimac 6.59 6.35 6.58 6.77
SBS Bank 6.15 5.85 5.99 6.19
Lender Flt 1yr 2yr 3yr
SBS Bank Special - - - 5.89
Silver Fern 5.95 6.10 6.55 7.05
Sovereign 6.85 6.09 6.40 6.65
Sovereign Special - - - 6.19
The Co-operative Bank 6.70 5.95 5.99 6.19
TSB Bank 6.74 5.95 6.19 6.30
TSB Special - - 5.79 -
Wairarapa Building Society 6.20 5.75 5.95 -
Westpac 6.59 6.09 6.39 6.65
Westpac - Capped rates - 6.74 6.99 -
Westpac - Offset 6.59 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - - 5.99 6.19
Median 6.70 6.00 6.39 6.57

Last updated: 23 September 2014 9:10am

News Quiz

What is back in the market for the first time since 2010 thanks to RESIMAC?

Securitisation

reverse mortgages

Chinese currency

a sense of security

MORE QUIZZES »

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by PHP Developer and eyelovedesign.com